Real Estate CH 1 and 2

An important distinction is the difference between an easement and a license. All of the following characteristics pertain to a license EXCEPT: Multiple Choice a license is revocable by the grantor. a license can be granted orally. a license is enduring. a license grants permission to use another's land for a specific and limited purpose.

a license is enduring

Real estate markets differ from other asset classes by having all of the following characteristics except Multiple Choice local market. high transaction costs. segmented market. homogeneous product.

homogeneous product

Which of the following would be considered a tangible asset? Multiple Choice land lease agreement mortgage listed REIT

l

Especially in terms of retail properties, which of the following attributes is considered the most likely to result in drastic value differences between otherwise similar properties? Multiple Choice structural attributes financing attributes location attributes land attributes

location attributes

All of the following are examples of an improvement on the land EXCEPT: Multiple Choice fences. building. walls. streets.

streets

Real estate is defined as land and its permanent improvements. Which of the following is an example of an improvement to the land? Multiple Choice fence building water and sewer systems personal property

water and sewer systems

Participants in the capital markets can be divided into four main categories: private equity, public equity, private debt, and public debt. Bank lending as a source of financing for the acquisition of real property occurs in the: Multiple Choice Private equity market Public equity market Private debt market Public debt market

Private debt market

Which of the following is an example of a negative easement appurtenant? Multiple Choice a driveway easement across one parcel to another rights-of-way for roads a common drive easement where owners of adjoining lots must permit each other to use a driveway lying on their shaped property line a scenic easement used to restrict construction on adjacent parcels so as to preserve a valued view

a scenic easement used to restrict construction on adjacent parcels so as to preserve a valued view

Which of the following is not important to the location of most commercial properties? Multiple Choice Access to customers Visibility Access to schools Availability of communications infrastructure

access to schools

An easement is the right to use land for a specific and limited purpose. Which of the following easements involves a relationship between two parcels of land, is a permanent feature of both parcels involved, and gives the dominant parcel some intrusive use of the servient parcel? Multiple Choice affirmative easement appurtenant negative easement appurtenant easement in gross license

affirmative easement appurtenant

The City of Baltimore installed a new water main along a main roadway. The city then decided to charge the property owners along this main roadway a proportional cost of the new water main. If a property owner refuses to pay their proportional share of the cost, the city may file a(n): Multiple Choice property tax lien. assessment lien. general lien. mechanics' lien.

assessment lien.

Real estate values derive from the interaction of three different sectors in the economy. Which of the following sectors serves to allocate financial resources among households and firms requiring funds? Multiple Choice user market capital market government property market

capital market

An example of a real estate asset that trades in the public debt market is a(n): Multiple Choice real property. real estate operating company. equity REIT. commercial mortgage-backed security (CMBS).

commercial mortgage-backed security (CMBS).

Specific liens derive directly from events related to a property. One such lien is established when the issuance of bonds is used to finance improvements within a private community This type of lien is more commonly referred to as a(n): Multiple Choice property tax lien. mortgage lien. community development district (CDD) lien. mechanics' lien.

community development district (CDD) lien.

Based on your understanding of the rules for determining when an object becomes a fixture, which of the following items would most likely be considered a fixture at the time of sale? Multiple Choice custom (built-in) bookshelves refrigerator in a single-family residence being sold fence installed by the tenant of a rental property curtains

custom(Built-in) bookshelves

Based on your understanding of the supply and demand dynamics of user/space markets, the new construction of units would, all else equal, cause which of the following effects? Multiple Choice decrease equilibrium rental rates and decrease property value decrease equilibrium rental rates and increase property value increase equilibrium rental rates and decrease property value increase equilibrium rental rates and increase property value

decrease equilibrium rental rates and decrease property value

The expected stream of rental income is capitalized into value by converting expected future cash flows into present value through a process called: Multiple Choice amortization. discounted cash flow analysis. direct capitalization. proforma.

discounted cash flow analysis.

Leasehold estates are often defined as the temporary conveyance of all of the following parts of the traditional bundle of rights typically associated with real estate ownership EXCEPT: Multiple Choice possession. use. disposition. enjoyment.

disposition

When identifying an easement appurtenant, the parcel of land that benefits from the right to use the land in question is referred to as the: Multiple Choice dominant parcel. servient parcel. licensed parcel. gross parcel.

dominant parcel

The right to use land for a specific and limited purpose is more commonly referred to as a(n): Multiple Choice easement. restrictive covenant. license. lien.

easement

Jayden owns 150 acres between a highway and a public beach. The state would like to construct a road directly from the highway to the beach across a number of beach front properties including Jayden's. The space for this road would be considered a(n): Multiple Choice implied easement. easement in gross. negative easement appurtenant. positive easement appurtenant.

easement in gross

An example of a real estate asset that trades in the public equity market is a(n): real property. home mortgage. equity REIT. commercial mortgage-backed security (CMBS).

equity REIT.

Which of the following types of ownership estates is the most complete bundle of rights, and therefore carries the greatest value? Multiple Choice fee simple absolute fee simple conditional ordinary life estate legal life estate

fee simple absolute

When viewed as a tangible asset, real estate can be defined as the land and its permanent improvements. Improvements on the land include: Multiple Choice fences. walkways. sewer systems. streets.

fences

Which of the following types of liens is automatically superior to any other lien? Multiple Choice government property tax and assessment lien mortgage lien lien arising from a court judgment unrelated to ownership of the property mechanics' lien

government property tax and assessment lien

Each commercial property has unique features, whether it is its age, the building design of its structures, occupancy or its location. As such, real estate markets consist of assets that are considered: Multiple Choice homogeneous. heterogeneous. substitutes. complements.

heterogeneous.

Among the following four categories, which is the largest asset category in the portfolio of the average U.S. household? Multiple Choice Housing Pension assets Deposits and money market funds Government and corporate bonds

housing

Storm water drainage systems are best described as Multiple Choice tangible assets. improvements to the land. intangible assets. improvements on the land.

improvements to the land.

Based on your understanding of the supply and demand dynamics of user/space markets, an increase in demand for leasable space would, all else equal, cause which of the following effects? Multiple Choice decrease equilibrium rental rates and decrease property value decrease equilibrium rental rates and increase property value increase equilibrium rental rates and decrease property value increase equilibrium rental rates and increase property value

increase equilibrium rental rates and increase property value

The term real estate is used in three fundamental ways. When real estate is defined as a bundle of rights associated with ownership and the use of the site and improvements, it is being viewed as purely a(n): Multiple Choice tangible asset. intangible asset. parallel asset. personal asset.

intangible asset.

While leasehold interests are considered estates, they differ from freehold estates in all of the following respects EXCEPT: Multiple Choice leasehold estates are limited in time. the right of disposition is diminished with a leasehold estate. leasehold estates are not titled interests. leasehold estates are possessory interests.

leasehold estates are possessory interests.

Nonpossessory interests (i.e., bundles of real property rights that do not include possession) include all of the following EXCEPT: Multiple Choice leasehold interests. easements. restrictive covenants. liens.

leasehold interests

A lien is an interest in real property that serves as security for an obligation. Which of the following is an example of a general lien? Multiple Choice property tax and assessment lien mortgage lien lien arising from a court judgment unrelated to ownership of the property mechanics' lien

lien arising from a court judgment unrelated to ownership of the property

Following the completion of a contract for construction or other improvements to a property, a contractor has the right to establish a lien on a property as protection against the case that a property owner defaults on the construction contract and/or fails to pay for the completed work. This lien is more commonly referred to as a(n): Multiple Choice property tax lien. mortgage lien. assessment lien. mechanics' lien.

mechanics' lien

Real estate is property, which can be either a tangible or an intangible asset. Which of the following would be considered an intangible asset? Multiple Choice land building mortgage fence

mortgage

Property rights can be divided into two classes, real and personal. Which of the following is an example of real property? Multiple Choice vehicles stocks and bonds patents an office building

office building

Brian just began graduate school at the local university and is looking to rent an apartment. A family friend has decided to lease him a two bedroom, one bathroom cottage through an oral agreement with no definite lease period outlined. Which of the following leasehold estates best describes Brian's situation? Multiple Choice tenancy for years tenancy at sufferance periodic tenancy tenancy by the entirety

period tenancy

Capital markets can be divided into four main categories: private equity, public equity, private debt, and public debt. An example of a real estate asset that trades in the private equity market is a(n): Multiple Choice real property. home mortgage. equity REIT. mortgage-backed security.

real property.

Suppose a homeowner lives adjacent to an expanding university that is interested in acquiring her residence for future university use. To allow the homeowner to continue to retain all rights of exclusive possession, use, and enjoyment during her lifetime, yet provide the university with the right of disposition, the university may want to purchase a(n): Multiple Choice legal life estate with remainder interest. conditional fee absolute with reverted interest. remainder interest from an ordinary life estate tenancy for years.

remainder interest from an ordinary life estate

Tom recently purchased a home in a residential subdivision. While mowing his lawn and planting new shrubs for the first time since moving in, Tom's neighbor came outside to inform him that he was violating one of the subdivision's rules which required the use of a specific professional lawn service for all property landscaping needs. Assuming this requirement can be enforced by the subdivision authority, this would be an example of a(n): Multiple Choice easement. restrictive covenant. lien. estate.

restrictive covenant.

When identifying an easement appurtenant, the parcel of land that is constrained or diminished by the easement is referred to as the: Multiple Choice dominant parcel. servient parcel. licensed parcel. gross parcel.

servient parcel

The term real estate is used in three fundamental ways. When real estate is defined as the land and its improvements, it is being viewed as purely a(n): Multiple Choice tangible asset. intangible asset. parallel asset. personal asset.

tangible asset.

A leasehold interest for a specific period of time is more commonly referred to as: Multiple Choice tenancy for years. tenancy at sufferance. periodic tenancy. tenancy at will.

tenancy for years

Real estate consists of the physical structures and infrastructure that accompany the land. All of the following are examples of an improvement to the land EXCEPT: Multiple Choice walkways. the building and parking lot. sewer system. streets.

the building and parking lot.

Competition for the currently available supply of locations and space coupled with the existing supply of leasable space, determines: Multiple Choice the current level of rental rates for each submarket and property. the riskiness of the expected cash flows of an income-producing property. the timing of the expected cash flows of an income-producing property. the cost of financing the purchase of a property.

the current level of rental rates for each submarket and property.

A principal definition of real estate is as a bundle of rights associated with the possession, use, and disposition of property. Each of the following is a fundamental characteristic of property rights EXCEPT: Multiple Choice they are enforceable by the government. they apply only to tangible assets. they are nonrevocable. they are enduring.

they apply only to tangible assets.

If we desire to classify land by its use, land that consists of residential, industrial, commercial, and institutional land uses would be classified as: Multiple Choice rural land. federal land. urban land. undeveloped land.

urban land

The demand for real estate derives from the need that market participants (e.g., owner occupants, tenants, renters) have for shelter and convenient access to other locations. This competition for physical location and space occurs in the: Multiple Choice user market. capital market. government sector. property market.

user (Space) Market